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The De-Portalization of the Internet (aka What I Would Do If I Were Running Yahoo!)

Comments (36) | Posted December 4, 2006 in stocks , Venture Capital and Technology

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I talk to feed/portal duality... the notion you need to be a sticky feed/but also with some rich portality... your blog is a great example. full text for me, with all your widgets at your .com if i come over to comment or whatever.

its not so much that the internet is being deportalised is it, so much as the portals are being pushed to the endpoints? that is, yahoo needs to find a way to disagrregate itself and push its portals out to users...

we are all portals - portals are where we do our declarative living. we just dont call them portals- but blogs, pageflakes or whatever....

Posted by: James Governor | Dec 4, 2006 8:04:13 AM

I have tried to use Yahoo!'s search as much or more than Google's over the past year as I want to support Yahoo! as much as possible. But I do not get the results I want from Yahoo!, particularly on advanced searches or complex search queries

I find this too. But I'm never sure about the conclusion that this means Google has the better search engine. If, for example, Google merely had the search engine that I was more used to, that would look like the same thing to me. Or in other words, what if Yahoo! had a better search engine but I had trained myself over many years to search in a Google way rather than a Yahoo! way? That would look to me like Google had better search. Since most people use Google it would look to most people like that. Not wanting to sound conspiracy theory about it, but if that's the Google's dominant customer-retention strategy would be to make its engine more idiosyncratic rather than "better". And Yahoo!'s would be to make its search behave as much like Google's as possible.

Posted by: Seamus McCauley | Dec 4, 2006 8:15:56 AM

I wonder if a) the deportalization is limited to a small contingent of "passionate web users". I look at my parents or in-laws computers and often their home page is still whatever came as the default (MSN/Yahoo etc.)

I suspect they also are more deliberate in their Internet usage. When they do wander off the reserve they're looking for something specific and likely only get one or two clicks out from their selected result at most.

On the flip side you've got people like me who can wander off down the rabbit hole for ages from a single query. I generate a lot of hits on a given day but very little of those hits are from clicking directly through a search result.

Yahoo's challenge right now I think is they no longer come across as an innovative company - their recent stuff that has the biggest buzz generally seems to me as things they've bought that already had a lot of momentum (i.e. Flickr).

Google's strategy of Spaghetti Innovation though constantly churns out new and inventive stuff, it doesn't always work but when they hit, they tend to hit big.

It seems that Yahoo got rich and lazy while Google got rich and vowed to try everything at least once.

Posted by: Ryan Coleman | Dec 4, 2006 8:57:40 AM

Hi Fred:

These are some very tangible suggestions and I think you're right on. This is a multi-faceted problem that Yahoo! is facing and there are no quick fixes. I believe your suggestions will be part of the solution.

That said, leadership is a key issue here. It's not the be-all-and-end-all, but it's what has allowed this malaise to sink in. Terry Semel and the board must shoulder the blame for this.

Did you read/hear their last conference call? Semel was heavy on the prepared comments and passing the ball off to Rosensweig and Decker for any specific questions. While I don't expect a CEO to get into the nittiest and grittiest of details, he's got to be able to be able to take on some specifics (a la John Chambers).

I hope they can turn it around.

Thanks,

Eric

Posted by: Eric Jackson | Dec 4, 2006 9:18:26 AM

Last month I wrote this about Yahoo:

http://www.daytradeteam.com/dtt/day-trading-strategy/2006/10/future-of-internet-customers-win-yahoo.html

Due to simple plugins like that one getting more and more popular, I'd be gun shy about betting big on banner ads.

Posted by: Andy | Dec 4, 2006 9:29:41 AM

You are right that Yahoo! needs to improve its search - the numbers I hear suggest they are going backwards in market share on this key metric - but I'm a little afraid that Google's dominance today may give them a structural advantage. They are in a better position to innovate than Yahoo because they have a much larger query set to work with. The hope for Yahoo! comes from Delicious, Flickr etc and the idea that they can factor user generated metadata into their search algorithm to deliver better results. But I'm not sure this will be enough.

As an aside - search is still pretty broken, as Ballmer said the other day, "how crazy is it that the more words you type into a search engine the worse the results get?"

Posted by: Nic Brisbourne | Dec 4, 2006 9:35:54 AM

"but I do not believe they have made a strategic decision to 'de-portalize' their business model."

It seems like the best strategy to de-portalize Yahoo while not cannibalizing
their current revenue would be to very quietly be building the un-portal Yahoo. Then when the current revenue stream finally goes into steep nose dive, introduce the ready to go, robust Yahoo 4.0

(because we will probably be on web 4.0 by then, right?)

Posted by: PRoales | Dec 4, 2006 9:42:20 AM

First, a tip of the hat to Bob Davis and the former team at Lycos, who built a de-portalized network of independent, separately branded services wayyy back in Web 1.0... and were so bleeding edge they were always discounted for for it.

And in the end maybe the old TV network model ain't so bad: certain centralized functions/services (e.g. national news and sports and prime time entertainment) which support the central brand and create awareness and buzz and audience which supports the decentralized functions/services (local news and sports, local and syndicated programming created/selected/placed by local management.)

Thats in essence what Lycos was aiming for, with the central nervous system being

* search
* registration/profile/rewards
* wallet

Which is still what Google, Yahoo, MSN, are doing, no?

And I agree with Ryan Coleman when he points out that folks like us who read and comment this blog are *not* the typical web surfer and for the vast majority of less-geeky folks, a simple one-stop portal like experience offers a vastly more desirable web

In the end though, Fred's point is still essential: just because a company theoretically can be everything to everybody doesnt mean it can in practice, or should even try

Posted by: steve | Dec 4, 2006 10:20:49 AM

Fred --

Good post -- I probably disagree more in priorities than specifics. What I would tell them, which they already know, is first and foremost get YPN fixed already! As a publisher, they are so far away from Google still in their ability to serve me it is a true achilles heel for the business....because it becomes a self-reinforcing cycle for Google -- the more publishers, the more advertisers, the more advertisers, the higher effective CPM, the more publishers.

The other very very large asset they have is advertising relationships with the largest buyers and companies in the world -- they need to leverage these dollars not only across YPN (something that should help them catch up) but also across as many other properties as possible. If I were them I would be going on a very large acquisitive binge, starting with Facebook, to play the abritrage game and buy websites doing $3 rpm and turn on the Yahoo ad rates.

Implicit in that strategy is they should also simultaneously be leveraging their vast technology and platform to launch from scratch hundreds of new web sites that they can monetize and drive traffic to -- whether they are called Yahoo or not is only important as to whether they can be successful. But the hardest part of this whole game we are playing I think is getting the right CPMs -- and Yahoo! already has that asset.

So I have to believe they are also going to launch sites not unlike http://www.buzztracker.com.

One more comment on YPN -- I do think the world is changing -- I believe more and more publishers will demand value-add, not just CPMs, as a condition for giving up real estate -- so ad networks will start partnering with people like MyBlogLog to not only provide superior CPM but strategically valuable services. With all these widgets coming out -- you simply can't fit them all on your site (even you!) -- you'll make decisions based on what is most useful for your readers.

I think that is a strategic opportunity for a competitor to adsense to come in and leverage a much larger ad sales force and relationships along with better value-add -- and I think Yahoo should focus here and hopefully if they do in fact buy MyBlogLog they'll get there.

--Alan

Posted by: AlFromChicago | Dec 4, 2006 10:48:10 AM

You call it de-portalization.
We call it widgetization.
Ugly words, but true. The coming wave.

Posted by: Ivan | Dec 4, 2006 11:17:51 AM

http://blogs.msdn.com/oldnewthing/archive/2006/11/27/1160055.aspx You might be interested in this and the embedded article claiming that Yahoo is the most searched-for term on Google. FWIW.

Posted by: David Gray | Dec 4, 2006 12:10:04 PM

I agree with your conclusion, but I wouldn't say that the de-portalization of the Internet is here to stay. The Internet seems to be more cyclic in nature: new advances/ideas temporarily de-portalize the Internet, only to result in its re-portalization when the big whigs (i.e. Google, Yahoo, MSN) incorporate the new features, or even the companies that developed them.

For instance, I heard a while back that Microsoft is coming out with a competitor to Craigslist (not sure if it's already out). This shows, as I believe, that companies like Microsoft wouldn't allow smaller singular service firms (i.e. Craiglist) to stop them from adding another potentially profitable revenue stream to their menu.

All of this, as we've already heard too many times, eventually would lead to web operating systems that control all aspects of computers.

I'd say centralization of the Internet is the ultimate aim: there's too much advertising revenue at stake not to offer services that attract as many eyeballs as possible.

But maybe, perhaps, companies like Yahoo could de-portalize while remaining centralized. We see examples of this already in the "parking" of domain names that have links to other useful sites and back to the parent company. It is also evident with acquisitions: Google with Youtube, Yahoo with Facebook(maybe?)--unique services are their own entity but loosely affiliated with a Google, Yahoo, MSN, etc.

I don't claim to be an expert in this area, but it's just my two cents worth.

Posted by: Steve | Dec 4, 2006 12:27:59 PM

"I wonder if a) the deportalization is limited to a small contingent of "passionate web users". I look at my parents or in-laws computers and often their home page is still whatever came as the default (MSN/Yahoo etc.)"

Actually, if you look at the next generation of web users (10-20), they ARE passionate web users as a functional group. So while my parents and in-laws also are focused on portals, the vast majority of kids are using multiple services to attend their online interests (be it shopping, pimping, entertainment, hooking up, etc)

Posted by: Ro | Dec 4, 2006 12:54:30 PM

A large portion of the company revenues, according to the annual reports, comes from the CPM ad sales, and hence Y! Search is more likely to lead a searcher to a Yahoo! destination than to an outside third-party site. Theoretically, the power of the network is beneficial for the user, as they're able to quickly navigate to Finance quotes, Sports scores or Autos dealer's invoices without going to another site and logging in or searching for information there.

I have my own pet theory about the shortcomings of Yahoo! Search - it doesn't perform well on non-English searches: it doesn't recognize the plurals of nouns and conjugations of the verbs, and with larger part of the US users now bilingual or more, people tend to stick to the search engine that covers their own non-English searches well.

Posted by: Alex Moskalyuk | Dec 4, 2006 1:36:49 PM

I would simply add this suggestions:

Yahoo! enhancing its search will never cause people to say "I Yahooed it..."

"Yahooing" something needs to be something different than search (if they managed del.icio.us well "Yahooing" could mean "bookmarking", as saying "del.icio.us-ed" or "del.icio.us-ing" is still super awkward).

Of course Yahoo search needs to be enhanced too, but only because if people eventually "Yahoo" something they'll want a positive search experience while they're at it.

Posted by: Nate Westheimer | Dec 4, 2006 1:42:12 PM

I wonder if people are really seeking (1) de-portalization of the Internet or (2) de-Yahooing! of the Internet.

Said differently, Yahoo! (and AOL, etc.) face two major hurdles in their quest to become the "one and only" portal that everyone should "worship" because they are so wonderful and so kind to care enough about us to give us exactly what we want (*sarcasm*).

First - Yahoo! is trying to be everything to everyone. Consequently, they become so "dilute" that they offer little residual value to "most everyone." (I'd rather go directly to an alternative site that has more "consentrated content" that I care about without having to jump over the "hurdle" known as Yahoo! before getting there.)

In sum, it is not the "idea / concept / notion" of a "Portal" that people object to, but rather it is "Consentrated Content" that they are after instead of "Dilute Minutia."

Second - Yahoo! (as well as everyone else) has made the "Brand" sacrosanct. In other words, everything needs to reinforce the "Yahoo!" brand ... even at the expense of being annoying. (Does Microsoft come to mind?) I'll even go out onto a limb by boldy asserting that in the future, the "branding paradigm" is going to slowly change away from "brand bombardment" to "brand benefits." In short, it will be less beneficial to bombard individuals over and over and over and over some more with a certain "brand name." Rather, consumers will care more about the benefits they derive from the brand, and if it strikes a cord with them, the brand will realize significant "value." (I would suggest that the single most valuable "brand asset" that a company could hope for would be "trust" ... as most brands don't have it and never will, but those lucky few who do obtain "consumer confidence / trust" will be extremely formidable.)

One final note on this second point. The problem with "brand bombardment" is that a particular "brand" - if it is a successful one - comes to mean a certain thing in a person's mind. In short, the "brand" has "crystalized" into a definite, definable "brand image." (Google = Search, Microsoft = Evil J/K) And this is one of the problems that Yahoo! faces. "Yahoo!" has come to mean something is most consumer's minds. Consequently, "Yahoo!" cannot become some amorphous blob that becomes everything to everyone. Come on, would you buy your wife a "Yahoo!" diamond ring for your 25th anniversary? or would a ring from "Tiffany's," etc. get you a little more "lovin?"

Posted by: DavidEzra | Dec 4, 2006 2:30:21 PM

Excellent points, I totally agree with you, and I think, de-portalization is a better term because widgetization does not cover all the aspects you mention here.

Mixd is really a good example and shows that Yahoo has already initiated the de-portalization strategy. And that's why adoption speed of Flickr, del.icio.us and upcoming is slow or 0. That should be a lesson Y! learned from their past acquisitions, I'll give GeoCities example, its fame was so so so great.. I was in the middle school at that time but I was hearing about it even in Turkey, it was a real phenomenon. But the adoption made GeoCities a total loss. It should have remained as an independent entity.

Would you prefer YouTube being rebranded as Google Videos? It's just killing, it should remain independent. This is a soul&magic thing. Would you rebrand Aspirin just because it's your own brand now. Aspirin is Aspirin, you should leave it as it is.

But I don't see any problem in Mixd being redirected to mixd.yahoo.com; after all you type mixd.com and you get the site. They can subdomain these brands to show co-operation and for Alexa like rating mechanisms

Posted by: Emre Sokullu | Dec 4, 2006 2:42:33 PM

i think it's not so much about de-portalization as it is making sure that whatever web pages / services you expose or syndicate through also have good conversion to the core business model offering / web service.

in other words, focus on conversion for whatever you're selling. if more page views help that, great. if better search helps that, great. if a different advertising system helps that, great. but certainly don't rest upon your laurels, and be responsive to the competitive market for eyeballs, clicks, minutes, and purchases.

for Yahoo, this means making sure core search is working better (aka Panama), as well as revving up YPN to be a reasonable option for publishers who are Yahoo partners or properties that are trying to monetize. it also might mean making a CPA-costed advertising option available... see:
http://www.venturebeat.com/contributors/2006/11/30/yahoo_monetization/

for Google, they are also trying to build a portal strategy, however they already have a core search product that works well, and a good AdSense product for publishers / affiliates. they're probably looking at whether they can use Analytics & Checkout to get to a CPA system. also whether they can offer user productivity tools to get deeper user demographics, and perhaps Google Base as another way to capture product catalog data.

for others, it's interesting that AOL and MySpace have essentially outsourced theid ad revenue strategies to Google (at least for the time being), under the assumption that they can't figure out a better way themselves. MySpace does have their own potential business in music and movie promotion, but they have yet to fully build out other services that leverage those areas. right now they're depending on Google.

in particular, eBay and MSN are at least as appropriate for the same criticisms leveled at Yahoo, and neither of them has much of a functional advertising network to speak of. eBay's monetization has been under attack for years from Google AdWords, and they seem to be unable to muster a competitive response (except to partner with both Google and Yahoo). while MSN now has its own search and advertising, they're clearly losing badly. it would probably make sense for them to either throw in the towel and outsource to Google (won't likely happen), or else re-tool and focus on acquiring either Yahoo or eBay (or maybe Ask/IAC or Amazon) to get to a better core business model.

one observation is that "de-portalization" for eBay effectively means moving away from the marketplace as a primary traffic area, and focusing on PayPal as a checkout option, and eBay as a product category listing engine. this is basically heresy inside the eBay corporate empire, and they're unlikely to ever head down that path -- too much risk in blowing up the current business model to ever do it with real gusto.

anyway, interesting post & great analysis as usual fred.

- dave mcclure
http://500hats.typepad.com/

Posted by: Dave McClure | Dec 4, 2006 3:35:05 PM

It always struck me that the Google homepage was genius for two reasons: it sparse design (search box plus 10 or so links) delivered not only a great user experience, but it also forced users to take the most lucrative action on the net: search.

Now compare with Yahoo's front page. Too many links, leading users to too many places that monetize at a level far below search. http://blog.topix.net/archives/000097.html

If I were Yahoo, I would seriously consider creating a home page experience that consisted of, you guessed it, a big search box, plus a few other links (in Y!'s case: email, news, finance, etc.). The remaining service could be accessible through search and/or user bookmarks.

Posted by: Mike Markson | Dec 4, 2006 4:38:33 PM

The primary reason that I didn't invest in Google in 2004 was because I believed that the search industry had a natural equalizer - SEO. I thought that no one search engine would be able to retain dominance for long, because their ability to deliver traffic would attract the attention of the majority of the SEO's who would dedicate their talents to breaking the lead engine, allowing the others to catch up.

This has turned out to be emphatically and completely wrong. Google is pulling away in search, despite the fact that every SEO that I know spends most of their time trying to manipulate them, and not Yahoo, Ask, or MSN.

So where does this leave Yahoo! I have no idea. Google search appears invincible to me.

Posted by: lawrence coburn | Dec 4, 2006 6:26:01 PM

I have been trying to come up with a new company to start in the consumer internet space or perhaps an innovative b2b play online. In doing so, I have been rehashing the internet in my own mind for a while. I remember before Google was Google, everyone used Yahoo. Then all of sudden, I was at someones house and they said check out Google and thus I never looked back.Is google better than yahoo? Yes. Was it always? no. Is google's search much better than Yahoo's? No.

Why did Google take off? Simplicity. Google was a search engine without banner ads and without crap surrounded it. People were not inundated with garbage. Even as the Internet ad market went to shit and sites started to whore out their inventory with popup, popunder, exit ad, transfer ad, intersticial and other great innovative ad units, google was still simple.

It is true that some people prefer being able to get everything in one place, in fact I like to. However, I can still use Google to do that and I Can get information displayed how I want it. Yahoo force feeds information. When Yahoo redesigned their site a little while back, my response was "great they shuffled around their shit" and that is all they did, the site is not easy to navigate or organize.

The key to being able to control a user is to let them think they can leave.

Google does this magnificently and has been slowly building on it (notice in your search results, books, finance, shopping etc...) reuslts neatly embedded.

You need to let the user choose what tabs they want to see, how they want it displayed and in what form and then they may use your products more. There is a tab on yahoo for GeoCities, when was the last time you saw ANYONE with a geocities?

I think the next generation of portal will be the following: a) Customizable portal, customized on personal preference and display b) Content available by going directly to a site or to a portal (ie: flickr photos viewable on flickr as well as within Yahoo Photos so that users that want a richer experience can go directly to the site while users that want a simple approach can get a simpler version from the portal. This way they get to play both sides of the coin, being able to create mini brands as well as harness the size of the portal. This is what google is doing, you can go to gmail.com or access it through your google home page.

Back on the topic of search, the one engine that used to get all the praise for technology was alta vista and was my favorite one as well.

Anyway, cheers

Richie
www.BootStrapper.com

Posted by: Richie Hecker | Dec 4, 2006 6:46:54 PM

I actually advocate taking it even further. Break up Yahoo. Too many initiatives either dying cause its not getting the proper support or adequately thriving for no good reason other than the traffic that Yahoo is drive it (but could have been paid for that traffic otherwise).

Split the company into 4 broad groups/companies - portal, media, applications, and search/advertising.

see here for more ranting & rambling
http://hitchhiker.blogsome.com/2006/11/28/it-chops-it-dices-it-minces-it-grates-its-a-yahoo-lbo/

Posted by: will | Dec 4, 2006 7:13:36 PM

For search, Yahoo need to leverage their Folksonomy assets.

They have Flickr and Del.icio.us, and also old school data such as Keyword metatags

Danny Sullivan was complementing Yahoo just recently on how well they managed with the US election results.

It might be just a search mashup, but they can do a great one.

I am one of those poor international website owners who is a 2nd class citizen

a) I can never use Yahoo coupons
b) I can't join their year+ long beta on YPN
I should point out 90%+ of my website traffic is North American.

Forget using Yahoo for results slightly more specific to the IP address you are using.

Posted by: Andy Beard | Dec 5, 2006 1:28:14 AM

De-Portalization / Widgetization etc...

At Webwag we prefere the term "Personal web" because we have created a personal wide web search: Webwag searches in the feeds you trust, aka those you installed on your Webwag page.

The Webwag Search box is in header, top-center, and keyword-based sponsored by yahoo. It returns both results from the personal wide web and the world wide web.

Posted by: Franck Poisson | Dec 5, 2006 5:48:42 AM

I disagree. Yahoo shouldn't try be Google, despite the success of Google. Instead it should build on its strengths to create a valid alternative. (Also, I think rebranding to de-portalize its holdings would do more harm than good.)

If I was in charge of Yahoo, I would add another possible homepage/entrypoint that was a simple text box, and when a person entered a search (after a disambiguation) it would break down into alternative possibilities for that search term. If you google for 'The Seychelles' you'll get a mess of results, and it's only by having Images or Blogs as a separate search that can you help filter that.

Instead for, say, 'Borat', it would return a structured result like as follows:

MOVIE: Borat
. . . . Local Showtimes
. . . . . . . Chico, CA
. . . . . . . Other locations
. . . . Reviews for Borat
. . . . . . . Roger Ebert: B+
. . . . . . . Elenor Gillispe: C-
. . . . IMDB-type information
. . . . . . . Borat Movie
. . . . . . . Sasha Cohen, Borat
. . . . . . . Actor B, Some Role
Images
. . . . [more..]

Blogs
. . . . Entry 1
. . . . Entry 2

Wikipedia-like Reference
...

(and finally) Highest Rank Results
...

I would build another IMDB and most importantly -- another Wikipedia. So once you search for a term you get many of the popular aspects for it. Wherever it can, it should aggregate as well, so that Yahoo Travel would also work with Expedia, Yahoo Jobs also gets postings from Craigs List, etc. (where possible).

Google has done well a decentralized approach, but my gut says there's more possible. I think Yahoo has the potential to leverage its structures and services to go from them being a hindrance to instead enhancing search and even possibly retaking the lead overall.

Posted by: David B. | Dec 5, 2006 9:08:00 AM

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